Question 1

Centerville has 200 unemployed people. Of these 200 people, 35 are unemployed for two weeks before finding a new job, 55 are unemployed for four weeks before finding a new job, 30 are unemployed for six weeks before finding a new job, 15 are unemployed for 10 weeks before finding a new job, and 65 are unemployed for 15 weeks before finding a new job. Approximately what is the average spell of unemployment in Centerville?
A) 2 weeks
B) 5 weeks
C) 8 weeks
D) 11 weeks
E) 14 weeks

Accepted Answer

C

Question 2

The United States funds its unemployment compensation system by taxing
A) all firms at the same rate.
B) older, larger firms at a higher rate than younger, smaller firms.
C) firms more when they have a history of causing more layoffs, up to a point.
D) firms more when they have greater profits so that they can afford the additional taxes.
E) nonunion firms more than union firms because union firms pay higher wages on average.

Accepted Answer

The United States funds its unemployment compensation system by taxing firms more when they have a history of causing more layoffs, up to a point. This is known as experience rating, where the tax rate is determined by the firm's history of layoffs.

Question 3

In the United States from 1950 to 2000, it was most likely that an unemployed person would
A) be re-employed in less than 5 weeks.
B) be re-employed in 5 to 14 weeks.
C) be re-employed in 14 to 26 weeks.
D) be re-employed in more than 26 weeks.
E) exit the labor force.

Accepted Answer

In the United States from 1950 to 2000, the median duration of unemployment was less than 5 weeks.

Question 4

If the steady-state unemployment rate for an economy is 5% and each period 2% of employed workers lose their jobs, what percent of unemployed workers find employment each period?
A) 8%
B) 18%
C) 28%
D) 38%
E) 48%

Accepted Answer

The answer of If the steady-state unemployment rate for an...

Question 5

James is currently unemployed. He is disappointed every Sunday when none of the job advertisements in the newspaper are for workers with his particular skill set. What type of unemployment is James experiencing?
A) frictional unemployment
B) seasonal unemployment
C) cyclical unemployment
D) structural unemployment
E) natural unemployment

Accepted Answer

James is experiencing structural unemployment, which occurs when there is a mismatch between the skills that workers offer and the skills demanded by employers. This type of unemployment arises from changes in the economy that alter the structure of the labor market.

Question 6

Why is frictional unemployment considered to be productive?
A) Search activities of workers and firms resulting in frictional unemployment improve the allocation of resources.
B) Firms do not hire a worker until they find the most educated worker.
C) There are more potential workers seeking jobs than there are jobs for workers when there is frictional unemployment.
D) The demand for highly skilled workers exceeds the supply of highly skilled workers when there is frictional unemployment.
E) Frictional unemployment leads to a decrease in the unemployment rate.

Accepted Answer

Frictional unemployment is considered productive because it involves the search process of workers and firms trying to find a good match. This search process, although it temporarily results in unemployment, ultimately leads to a better allocation of resources in the economy as workers find jobs that better match their skills and preferences, and firms find employees who are a better fit for their needs.

Question 7

Which of the following would not increase the asking wage?
A) The government expands unemployment insurance benefits from 26 to 52 weeks.
B) The government increases the maximum weekly unemployment benefit from $500 to $800.
C) The unemployment rate increases.
D) One's spouse receives a pay raise.
E) The government stops taxing unemployment insurance benefits.

Accepted Answer

An increase in the unemployment rate typically leads to more competition for jobs, which can pressure individuals to accept lower wages rather than higher ones. The other options (A, B, D, E) would likely increase the asking wage because they either directly increase the financial security of the unemployed (through enhanced benefits) or indirectly increase household income, reducing the immediate need for employment.

Question 8

In the United States, the average replacement ratio associated with unemployment insurance benefits is
A) 10%.
B) 35%.
C) 50%.
D) 80%.
E) 100%.

Accepted Answer

The average replacement ratio associated with unemployment insurance benefits in the United States is 35%.

Question 9

What does it mean to conduct a sequential search?
A) to search for jobs even when employed
B) to accept a job offer from an employer, but then to still search for a better job offer
C) to accept the first job that one is offered
D) to apply to all job openings
E) to determine an asking wage and then accept the first job offer that pays a wage equal to or greater than the asking wage

Accepted Answer

A sequential search involves setting a criterion (in this case, an asking wage) and then proceeding through options until one meets or exceeds that criterion, which is what option E describes.

Question 10

Consider an economy with a labor force of 100 million people. Each period, 60% of the unemployed population finds a job while 15% of the employed population loses their job. What is the steady-state unemployment rate in the economy?
A) 5%
B) 10%
C) 15%
D) 20%
E) 60%

Accepted Answer

The answer of Consider an economy with a labor force...

Question 11

Which age group experiences the highest rates of unemployment in the United States?
A) 16 to 24 years old.
B) 25 to 34 years old.
C) 35 to 44 years old.
D) 45 to 54 years old.
E) 55 to 64 years old.

Accepted Answer

The 16 to 24 years old age group typically experiences the highest rates of unemployment in the United States. This is often due to factors such as lack of experience, transitioning from education to the workforce, and higher rates of job turnover.

Question 12

What is the general relationship between race and unemployment rates in the United States?
A) Whites have the lowest rate of unemployment; Hispanics have the highest rate of unemployment.
B) Whites have the lowest rate of unemployment; blacks have the highest rate of unemployment.
C) Hispanics have the lowest rate of unemployment; whites have the highest rate of unemployment.
D) Hispanics have the lowest rate of unemployment; blacks have the highest rate of unemployment.
E) Blacks have the lowest rate of unemployment; Hispanics have the highest rate of unemployment.

Accepted Answer

Historically and statistically, whites have tended to have lower unemployment rates compared to other racial groups in the United States, with blacks often experiencing the highest rates of unemployment. This pattern reflects broader socio-economic disparities and systemic issues.

Question 13

What is the best description of unemployment insurance benefits in the United States?
A) All unemployed workers receive the same benefit regardless of what their previous job was.
B) All unemployed workers receive the same wage-adjusted benefit regardless of what state they live in.
C) Unemployment benefits are based on family size and age.
D) The dollar value of unemployment benefits is greater for low-wage workers than for high-wage workers.
E) Unemployment benefits are a greater percentage of previous earnings for low-wage workers than for high-wage workers.

Accepted Answer

Unemployment benefits in the United States are designed to partially replace lost wages, and the percentage of previous earnings that benefits represent is typically higher for low-wage workers than for high-wage workers. This system is intended to provide a safety net that is proportionate to the worker's previous earnings, up to a certain cap.

Question 14

According to the neoclassical model, what would not result from the government levying a tax on firms for each worker the firm lays off?
A) Firms would be less likely to lay off workers.
B) Firms would be less likely to hire workers.
C) Moral hazard would encourage workers to not work as hard as before.
D) The long-run unemployment rate would decrease.
E) Unemployed workers would remain unemployed for longer periods of time.

Accepted Answer

The neoclassical model suggests that taxes on firms for laying off workers would make layoffs less attractive, potentially leading to fewer layoffs (A) and possibly making firms more cautious about hiring (B) due to the increased cost of future layoffs. It could also lead to moral hazard, where workers might not work as hard knowing it's more costly for the firm to lay them off (C), and could result in unemployed workers remaining unemployed for longer if firms are more hesitant to hire (E). However, it does not necessarily imply that the long-run unemployment rate would decrease, as the model focuses on how such taxes affect behavior related to layoffs and hiring, rather than directly influencing the overall unemployment rate.

Question 15

Consider an economy with a labor force of 200 million people of which 180 million are employed while 20 million are unemployed. Each period, 45% of the unemployed population finds a job. If the economy is in a steady-state of unemployment, what percent of the employed population lose their job each period?
A) 5%
B) 10%
C) 15%
D) 20%
E) 25%

Accepted Answer

5%In a steady-state, the number of people finding jobs equals the number of people losing jobs. With 20 million unemployed and 45% of them finding jobs each period, 9 million (45% of 20 million) find jobs. To maintain a steady-state, 9 million of the 180 million employed must lose their jobs, which is 5% (9 million / 180 million * 100%).

Question 16

How does the asking wage depend on the unemployment insurance (UI) system in the United States?
A) The asking wage is constant regardless of the unemployment insurance system.
B) The asking wage will fall as the unemployed worker gets closer to exhausting his or her UI benefits.
C) The asking wage is lower while receiving UI benefits than after one's UI benefits have expired.
D) The asking wage is lower the more likely it is to receive a job offer.
E) The asking wage is lower the more skills the unemployed worker has.

Accepted Answer

The asking wage tends to fall as the unemployed worker gets closer to exhausting their UI benefits because the urgency to find employment increases as the financial cushion provided by UI diminishes.

Question 17

How are unemployment rates in the United States related to education?
A) Unemployment rates are unrelated to education.
B) Higher levels of education are associated with higher rates of unemployment.
C) Higher levels of education are associated with lower rates of unemployment.
D) Unemployment rates are highest for high school dropouts but are unrelated to education for anyone who has a high school degree or more.
E) Unemployment rates for high school dropouts and high school graduates are roughly equal and are less than the overall unemployment rate of college graduates.

Accepted Answer

Higher levels of education are generally associated with lower rates of unemployment. This is because individuals with more education are often more competitive in the job market, have a wider range of skills, and can qualify for a broader selection of jobs, leading to lower unemployment rates among this group.

Question 18

An important development during the Great Recession (roughly 2008-2012) was that
A) more than 35 percent of all unemployed workers remained unemployed for more than 26 months.
B) most than 50 percent of all unemployed workers remained unemployed for 13 to 26 weeks.
C) the unemployment rate increased dramatically but the average unemployment spell remained constant at about 8 weeks of unemployment.
D) more than 70 percent of all unemployed workers exited unemployment within 5 weeks; however, most of this movement was due to the unemployed becoming discouraged and exiting the labor force rather than finding a job.
E) the amount of frictional and seasonal unemployment increased dramatically while the amount of structural unemployment decreased substantially.

Accepted Answer

During the Great Recession, the duration of unemployment increased significantly, with many workers remaining unemployed for extended periods, such as 13 to 26 weeks.

Question 19

Compared to a labor market that has no unemployment benefit system, the unemployment insurance system of the United States probably
A) leads to shorter spells of unemployment.
B) increases the unemployment rate.
C) leads to lower post-unemployment wages.
D) provides for a lower standard of living while unemployed.
E) is less costly for firms.

Accepted Answer

Unemployment insurance can increase the unemployment rate by providing financial support to unemployed individuals, which may reduce their urgency to find new employment quickly. This can lead to longer periods of job search and higher overall unemployment rates.

Question 20

Anna works on a farm every spring during planting season and every fall during the harvest season. The farm fails to employ Anna during the summer or the winter. What type of unemployment does Anna experience?
A) frictional unemployment
B) seasonal unemployment
C) cyclical unemployment
D) structural unemployment
E) natural unemployment

Accepted Answer

Anna experiences seasonal unemployment, which occurs when people are unemployed at certain times of the year because their jobs depend on the season. In Anna's case, her work on the farm is only needed during the planting and harvest seasons, not during summer or winter.

Quiz 12: Unemployment

The United States funds its unemployment compensation system by taxing

In the United States from 1950 to 2000, it was most likely that an unemployed person would

If the steady-state unemployment rate for an economy is 5% and each period 2% of employed workers lose their jobs, what percent of unemployed workers find employment each period?

James is currently unemployed. He is disappointed every Sunday when none of the job advertisements in the newspaper are for workers with his particular skill set. What type of unemployment is James experiencing?

Why is frictional unemployment considered to be productive?

Which of the following would not increase the asking wage?

In the United States, the average replacement ratio associated with unemployment insurance benefits is

What does it mean to conduct a sequential search?

Consider an economy with a labor force of 100 million people. Each period, 60% of the unemployed population finds a job while 15% of the employed population loses their job. What is the steady-state unemployment rate in the economy?

Which age group experiences the highest rates of unemployment in the United States?

What is the general relationship between race and unemployment rates in the United States?

What is the best description of unemployment insurance benefits in the United States?

According to the neoclassical model, what would not result from the government levying a tax on firms for each worker the firm lays off?

How does the asking wage depend on the unemployment insurance (UI) system in the United States?

How are unemployment rates in the United States related to education?

An important development during the Great Recession (roughly 2008-2012) was that

Compared to a labor market that has no unemployment benefit system, the unemployment insurance system of the United States probably

Anna works on a farm every spring during planting season and every fall during the harvest season. The farm fails to employ Anna during the summer or the winter. What type of unemployment does Anna experience?